Turn Bad Debt into Good Debt and Bad Credit into Good Credit
Debt collectors are in the business of doing one thing: collecting money. Often feared and dreaded, they can be aggressive and make your life stressful. Knowing your rights when it comes to debt collectors, though, can relieve some of that stress and help you take care of those annoying accounts.
There is a federal law called the Fair Debt Collection Practices Act (FDCPA) that requires that debt collectors treat you fairly. It doesn't stop them from trying to collect, but it does place certain limits on how they can collect.
The FDCPA applies to personal, family, and household debts. Business debts are not covered by the FDCPA. But if you used a personal credit card for purchases that were used by your business, the collector probably won't know that and is likely to follow the FDCPA if you know your rights.
A debt collector is any person who regularly collects debts owed to others. This includes attorneys who collect debts on a regular basis. It generally only applies to outside debt collection agencies, and not to creditors collecting their own debt, though your state may have laws that apply to creditors.
When you are first contacted by a debt collector, you should do several things:
1.Get contact information for the debt collector, including a phone number and address.
2.Dispute the debt if you think it's incorrect. Write to the collection agency immediately disputing the debt and requesting verification. Send your letter certified mail, return receipt requested. You're entitled to this verification under the FDCPA. Unless you are certain that you owe the full debt, disputing it will place the debt under dispute and give you time to figure our your options.
3.Start a correspondence file to keep notes about all your contacts with the collection agency: who called, what they said, and what was agreed. Also keep copies of all written correspondence. If the collector acts improperly, you may have legal remedies.
4.Verify that the statute of limitations for collecting the debt has not expired; for a state-by-state listing of collection time limits, visit www.successdna.com. If it has, the collector can't sue you for the debt. And if you tell them to stop contacting you about the debt, they must comply.
5.Do not pay a collector anything until you have established the debt is legitimate and worked out a payment arrangement. Don't be bullied!
A collector may contact you in person, by mail, telephone, telegram, or fax. However, a debt collector may not contact you at inconvenient times or places, such as before 8:00 A.M. or after 9:00 P.M. your time, unless you say that's okay. A debt collector also may not contact you at work if the collector knows that your employer disapproves of such contacts. If you tell a collector that you're not allowed to take calls at work, make a note of that conversation. If they do it again, call an attorney.
Report any problems you have with a debt collector to your state attorney general's office (go to www.naag.org and click on your state's listing) and the Federal Trade Commission (www.ftc.gov). The FTC receives significant numbers of complaints about collection agencies each year and reports those to Congress. While they don't get involved in individual disputes, they may take action against a collection company when they see a pattern of violations. Speak up!